Glanbia H1 helped by dairy margins, performance nutrition

Irish dairy group Glanbia booked higher first-half earnings this morning (19 August) thanks to another "strong" showing from its performance nutrition business and improved margins at its dairy Ireland unit.

EBITA from wholly-owned businesses rose to EUR138.5m (US$153.2m), a 29.1% increase on a reported basis thanks to currency tailwinds from the depreciation of the euro against global currencies. Stripping out currency impact, operating earnings increased 7.5%. The fastest growth was seen at Glanbia's global performance nutrition unit, where EBITA rose 41.5% - or 17.4% excluding currency exchange – to EUR60.7m.

The company also flagged a "good result" from its Dairy Ireland division, where it was able to report a "margin recovery" to 4.7%. Overall, group EBITDA margin expanded 140 basis points to 9.7%, Glanbia revealed.

Net profit at the group rose to EUR106.4m, versus EUR86.8m last year. Glanbia said financing costs were broadly in line with last year but added that pre-tax exceptional charges rose by EUR4.4m to EUR19.1m.

While the company reported higher earnings in the period, sales excluding currency exchange were down. Revenue dropped 8.4% on a constant currency basis as "good" branded revenue growth was offset by the weakness of the global dairy commodities markets. Reported sales were up 4.4% to EUR1.9bn.

MD Siobhán Talbot, said: "Today's results demonstrate that our strategy is on track. As a global nutrition company, we are focused on the development of a branded and ingredient product portfolio to serve the growing consumer demand for nutritional products in formats suitable for healthy and active lifestyles. This has provided some insulation from the challenges of volatile global dairy markets."

Glanbia, which has a third division of global ingredients, reiterated its guidance for fiscal 2015 of 9-11% growth in adjusted earnings per share, excluding foreign exchange. "If the euro US dollar exchange rate remains at current levels for the full year Glanbia expects 2015 reported adjusted earnings per share growth of circa 25%," the group added.

Jefferies analyst Alex Howson said: "All three divisions exceeded our expectations at both actual and constant fx. However, over half of the beat came from the star division of global performance nutrition."

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